Why This Analyst Came Away 'Incrementally More Constructive' From AMD's Analyst Day

Advanced Micro Devices, Inc. AMD held its Analyst Day event on Thursday, when it issued commentary on financials and product pipeline.

The AMD Analyst: KeyBanc Capital Markets analyst John Vinh reiterated an Overweight rating and $150 price target on AMD shares.

The AMD Thesis: Following the event, KeyBanc is incrementally more constructive on AMD's ability to sustain outsized growth of about 20%, analyst Vinh said in a note. The analyst also expects the company to gain market share at the expense of its rival Intel Corporation INTC in data center.

AMD reiterated its 2022 revenue guidance of $26.3 billion, representing 31% pro forma growth and margin guidance of 54%, the analyst noted. Strong data center, embedded and gaming consoles will likely offset weaker PC demand, he added.

The company maintained its long-term revenue growth guidance of 20% but increased its gross and operating margin expectations to 57% and 35%, respectively, from 50% plus and $20%, Vinh said.

The analyst also noted that the company sees increased cost synergies from its Xilinx acquisition.

Related Link: Why This Analyst Recommends AMD And These 3 Chip Stocks As His Favorite Semiconductor Plays

On the product roadmap, Vinh noted AMD confirmed its next-gen server CPU Genoa processor will ramp up in the fourth quarter of 2022. It will boast of a 75% plus performance improvement over Milan, the analyst said. The cloud-optimized Bergamo will ramp in the first half of 2023, he added.

"With increased scale and profitability from the acquisition of XLNX and a continued focus on data center, we expect AMD to sustain outsized growth given secular growth in cloud and share gains," KeyBanc said.

AMD Price Action: AMD shares were down 2.50% to $96.33, Friday morning according to Benzinga Pro data.